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Posted On: October 12, 2021
Updated On: October 13, 2021

The Essential Guide to LMS Pricing

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A Breakdown and Comparison of Common LMS Pricing Models in the Market

eLearning is an increasingly popular strategy for learning in the workplace and a learning management system (LMS) is the tool of choice to administer and track this training. But, with so many LMS options out there, it may not be easy to decide which one is right for you. Especially since pricing is—understandably—a major factor in most LMS procurement processes.

There are plenty of LMS pricing models out there, and there's one (or maybe more) that's right for you. Let's explore the most common pricing structures out there and break down the considerations for each.

Why is an LMS Such an Important Investment in Today's World?

A learning management system has a variety of uses for all kinds of companies: compliance training ensures the organization abides by government regulations; onboarding prepares new employees with the resources they need; on-the-job training (OJT) provides an opportunity to gain practical work experience; extended enterprise training better enables partners, customers and vendors; plus so much more.

In addition to the uses outlined above, an LMS's criticality lies in the software's positive learning outcomes and the changing global landscape.

In recent years, the world has leveraged evolving technology in work and education more frequently, increasing demand for remote work and schooling. In the past 12 years, the number of people who work from home has risen by 159%, with 44% of that growth in the last five years.

This trend, which was already gaining momentum, rapidly escalated during the pandemic. And with a sharp increase in remote work comes a rise in remote learning. Consider the following statistics from recent research:

  • As of 2020, it is estimated that 98% of corporate learning took place online.
  • With the emphasis on remote and hybrid work options, it is likely that this measure will never return to pre-pandemic settings.
  • Employees state that they learn five times more material via eLearning.
  • eLearning can help students to retain between 25% and 60% more information.
  • Since 2020, 98% of universities had moved classes online.

These eLearning trends are also underscored by the global eLearning market which is projected to be worth $325 billion in 2025.

Since the world has moved toward—and will continue to embrace—remote and hybrid work, an LMS will continue to be the most effective way to promote your learning initiatives. Whether you plan to return to the office, work remotely or take a hybrid approach, an LMS delivers an interactive, flexible and scalable learning experience that engages your learners, promotes professional development and enables your extended enterprise.

LMS Pricing Comparison: Choosing Your Best-Fit Model

Your needs are specific. And since LMS pricing isn't one size fits all, examining the advantages and disadvantages of popular LMS pricing models is crucial in deciding which one is right for you. We'll examine some of the most common models, including pay per user and pay per active user, while also examining other LMS pricing and costs associated with a perpetual license and open source LMS.

Pay-Per-User

The pay-per-user model is relatively straightforward: You pay a fee based on the number of learners in your platform during each billing cycle. All of the learners in your system are counted towards your bill.

 Most Common Use Cases:

  • Companies training their internal employees on compliance-related courses or skills development.
  • Organizations training a fixed number of external users such as contractors.

Could Be a Fit For:

  • Consistent Learner Count and Usage: If you are unlikely to have a sharp increase or decrease in LMS users, this simple LMS pricing would probably work for you.
  • Predictable Billing: Finances can be quite the headache. If your LMS bill arrives with the same consistent number, it's one less thing to worry about.

Might Not Be a Match for:

  • Unpredictability On Your End: Fixed, unchanging workplace circumstances are essential for you to get the most out of this pricing model. If you aren't sure how many learners will be consistently taking courses throughout the entire year, or if you're experiencing turnover or an influx in new hires; you may want to consider other LMS pricing models that could be more efficient for you
  • Potential to Pay Higher Prices Than Necessary: It doesn't matter if your learners are actually using the LMS or not –– you are still paying for everyone registered in the system. If you have a lot of inactive users, another model may be a better fit.

Pay-Per-Active-User

This style is similar to pay-per-user, but with a twist. Paying per active user means you could be charged a fee based on the learners who log into the system or users who take a course during the billing period.

Most Common Use Cases:

  • Medium to large organizations that need access to historic activity for inactive users
  • Organizations with eCommerce or customer training initiatives that have an unpredictable number of users.
  • Associations performing annual recertification of users that are only occasionally active

Could Be a Fit For:

  • Maximizing Value: Because you're only paying for the learners actively engaging with your platform, you really get the bang for your buck. As a result, active user billing can maximize the actual value your organization gains from the LMS.
  • Heavy Compliance Needs: If you need to access records for all past users, this model is likely the best in allowing you to view and provide compliance reporting for all users that have come through your system, both active and inactive.

Might Not Be a Match For:

  • Less Predictable Bills: Because user activity will likely fluctuate, you'll probably encounter bills that vary in size. If you're worried about sticking to a consistent budget, active user billing might not deliver on what you're expecting to pay every month.

Perpetual License Fee

A perpetual license-based LMS pricing model involves a blanket cost to use the software. This offers organizations the ability to—in a sense—own the software for the length of their contract. There aren't many who utilize this kind of LMS pricing as it can be expensive to license and there are many other associated costs.

Most Common Use Cases:

  • Larger organizations with their own data center or cloud infrastructure want to fully manage the LMS themselves, including updates, hosting, etc.
  • Entities that must strictly control their training and their learning platform for security or legal reasons (e.g. a government organization).

Could Be a Fit For:

  • Full Security and Control: Organizations that need to maintain their systems within their own data centers and or maintain higher control over things like enhancement releases may benefit from this model.

Might Not Be a Match For:

  • Fewer Technology Resources: With the most common use cases of this model, a host of highly technical internal resources are required to host, maintain, and update the system on an ongoing basis. Companies that have strategically shifted to the cloud will prefer a SaaS model to perpetual licensing.
  • No End-User Support: Organizations that adopt the perpetual license fee model must provide their end-user and system support if software issues arise. If your organization does not have the infrastructure to provide this level of support, this pricing model might not work.

Open Source 

An open-source LMS shares its code publicly so that you can use it for free. However, that doesn't mean this LMS model doesn't come with costs. You'll likely have to pay someone to help with setup, build customizations along with ongoing maintenance and ensuring stability from multiple externally built components.

Most Common Use Case:

  • Organizations that have the technical capability to host their own LMS and want to build it to their exact specifications and needs.

Could Be a Fit For:

  • Large In-House Technical Team: If your team has strong technical or coding skills, an open-source LMS might be a good fit. You can build the customizations you want, and you will have a strong team managing it.
  • User Count Freedom: If you don't want to factor your user count into the price, this won't be a problem with open source.

Might Not Be a Match For:

  • Price Conscious Buyers: While the code is free and available, the costs of building, implementing and maintaining will most assuredly add up. We've also seen the costs of these systems end up costing more in the long run due to these ongoing or other unforeseen costs.
  • Lack of Full-Time Technical Resources: If you don't have the development and IT resources within your current organization to build, implement, support and continually manage the LMS, you'll be paying contractors to oversee it full-time.
  • Those Wanting Stability and UI/UX Polish: An Open Source LMS may not have the stability or polish of commercial products that spend cycles undergoing UX/UI testing, QA processes and stringent security and hosting protocols.

Other Considerations for LMS Pricing

Support

Customer support plays a huge role in choosing your LMS pricing structure. First, evaluate what level of support an LMS solution provides. Some may only offer self-serve support options, while others include a support team or a designated support contact.

Likewise, not all support teams are created equal. Ask questions are SLAs and

eCommerce

Some organizations may hope to sell courses through their LMS. These types of organizations might include associations, franchises, training companies and more.

There are LMS platforms that have out-of-the-box eCommerce functionality. Look for those with robust functionality, including various payment gateways, multiple currencies, ability to sell courses in bulk, pricing options, brandable interface, coupons, user self-enrollment, and more.

Extended Functionality

Are you looking for an LMS that offers functionality beyond the basics? This could include artificial intelligence, BI (business intelligence), gamified and interactive learning options and social learning features.

Consider choosing an LMS platform that offers advanced options to set your learning program up for success now and into the future.

Course Authoring

If your organization has highly specific training or simply wants to personalize your courses, consider an LMS that offers built-in course-authoring and/or custom course development services. You never have to feel limited to off-the-shelf course options.

Analytics & Business Intelligence

Get deeper insight into your course performance, learner progress, and training data through your LMS's robust analytics and reporting functionality. Reporting and analytics help you:

  • Make more informed decisions
  • Prove your learning program ROI
  • Align business initiatives with your training
  • Drive better business outcomes

Mobile

Mobile learning is an essential piece of a learning program. In fact, 43% of learners see improved productivity levels compared to non-mobile users. If you want to reach learners from anywhere, consider an LMS provider with a mobile learning app.

Mobile flexibility is vital for so many users due to the evolving hybrid work model that places many learners working remotely. Therefore, an investment in mobile learning is an important one when considering pricing.

Integrations

Integrating your most essential apps and software with your LMS is critical. Pay careful attention to the turnkey integrations your LMS offers to see if there are easy pre-built options for your critical everyday work platforms. Many providers also enable clients to connect other systems via API .

The Case for Tailored LMS Pricing

Perhaps several of these LMS pricing models appealed to you, but, as evidenced above, each does come with its own set of pros and cons.

Absorb LMS understands that it's imperative to meet you where you are. That's why we offer a more tailored pricing approach based on your input and our recommendations.

Absorb reps consult with you about your company size, budget, eLearning goals, usage patterns and other considerations to craft the unique pricing model that works for you and is flexible enough to accommodate future growth and changes. As a result, the pricing process is easy, hassle-free and designed uniquely for you.

If you're interested in learning more about your custom LMS package, get in touch with us. We'd love to help you achieve your most crucial eLearning objectives.

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